This week, BBC's Panorama programme investigated the burgeoning "trauma industry" in the UK, and Ros Wynne-Jones commented in The Guardian that: "No Win, No Fee Britain ... now suffers PTSD at the click of a mouse, with personal injury claims websites listing the symptoms and then a Start Claim button."
While earlier this year, The Independent reported that "ambulance-chasing claims firms are preying on victims of crime, road accidents and financial mis-selling by cashing in on hundreds of millions of pounds worth of compensation."
In response to the furore over unfair no win, no fee arrangements, the Ministry of Justice recently proposed an amendment to the Coroners and Justice Bill, currently being examined in the Lords; it seeks to regulate aspects of "damages-based agreements" - sometimes referred to as "contingency fee agreements" - which allow lawyers to claim a percentage of awards won on behalf of their clients.
Announcing a consultation paper on this issue - called 'Regulating Damages Based Agreements' - Jack Straw, the Lord Chancellor and Secretary of State for Justice, said:
"Unregulated contingency fee arrangements expose claimants to unfair terms and conditions ... which could lead to huge slices being taken out of their damages. These arrangements - unlike, for example, conditional fee agreements [which, confusingly, are also referred to as no win, no fee agreements] - have until now been without statutory regulation because of a longstanding legal anomaly. The ... government seeks to redress this, offering proper regulation to protect the interests of consumers."
The proposed regulations include:
- a cap on the percentage of damages that can be recovered by legal representatives;
- a requirement that legal representatives provide claimants with clear and transparent information on total costs;
- a requirement that legal representatives clarify the deductions made from the claimant's award which are to go to the representative as their fee for taking the case; and
- a requirement that they provide explicit information on alternative methods of funding.